Medicare Physician Payment

Overview

Currently, Medicare pays physicians for their services by means of the flawed Sustainable Growth Rate (SGR) formula. The SGR produces negative payment rates based on unrelated economic factors, not on the health care needs of Medicare patients or on physicians’ costs of providing care.

For over a decade, Congress regularly has found it necessary to override this dysfunctional formula, a testimony to its inappropriateness.

In 2014, all of organized medicine supported a bipartisan bill that would have repealed the SGR and provided a clearly defined path to permanent payment reform. The bill would have encouraged changes in payment that would improve the delivery of health care by supporting primary care.  Congress failed to pass this bill because of disputes over how to pay for it.  Consequently, legislators resorted to another short-term extension of the SGR until March 31, 2015. But no matter how many times it has been extended, the fact remains that the current flawed approach does not serve Medicare patients well and must be changed to reflect the value of primary care and family physicians.

The time is now to pass legislation that will avoid a 21-percent physician payment cut and will reform the physician payment system to focus on the delivery of primary care. The cost of repeal and reform, which last year was at an all-time low, is now beginning to increase. 

After 17 "doc fixes" at a cumulative cost of $169.5 billion for these temporary patches to the broken SGR formula, the AAFP is trying to step up the efforts to permanently repeal the SGR formula and to change payment systems to reflect the value of primary care.


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